Bill Silverfarb/Daily JournalMichaels arts and crafts store in San Mateo has found a new spot to relocate to after its lease expires next year but it is in a spot that is not zoned for such a large retail store. Michaels officials hope the city will change its mind and allow the store to move to the old Borders bookstore across from the Hillsdale Shopping Center.

Although the lease does not expire at its current home for another 17 months, arts and crafts store Michaels is trying to find a new home well before that at the site of the former Borders bookstore on El Camino Real in San Mateo.

It might not be an easy move, however, as the site’s owner recently filed a lawsuit against the city challenging its zoning rules that limit retail uses in the city’s rail corridor.

Although 1998 Books Holdings LLC has since dropped its lawsuit, it has appealed to the city’s Planning Commission to allow Michaels to relocate to the site on 2925 S. El Camino Real from its current location on Delaware Street near Kmart.

The city had objected to the company’s lawsuit because it had not appealed administratively the decision by city staff to deny issuance of a business tax certificate, according to City Attorney Shawn Mason.

The company has now filed an administrative appeal to the Planning Commission, which it will consider Sept. 10.

The city’s blueprint for the area limits retail uses to 15,000 square feet, except for supermarkets or drug stores, which do not have size limits.

The city changed its zoning rules regarding the area around the Hillsdale Caltrain station in May 2011, when an ordinance passed that put the property into the city’s Rail Corridor Transit-Oriented Development Plan.

The current Michaels store is approximately 30,000 square feet as is the Borders, which has been subleased in recent years by the Spirit Halloween Store in Octobers.

Books Holdings is hoping the use can be “grandfathered” in for a new tenant but the city deemed recently that the use would be non-conforming under city code since the retail use was discontinued for six months.

Michaels has circulated fliers and a card for supporters to sign to present to planning commissioners at the Tuesday night meeting. So far, about 3,500 signatures have been gathered including that of San Mateo resident Elaine Morgan.

“They have everything. It’s great for mothers with kids and its well priced and they even have classes,” Morgan said.

She also mentioned the fact that a new Target store will be operating soon at the Hillsdale Shopping Center, across from the old Borders, San Mateo’s second such store.

“If you can have two Targets, why can’t the gals have one Michaels?” she said.

Michaels has approximately 1,100 stores in total and its current one in San Mateo sits on land that will one day be home to Station Park Green, a mixed-used transit-oriented development near the Hayward Park Caltrain station.

Michaels needs at least 21,000 square feet of space to be profitable and wants to stay in the neighborhood, said Rick Galbreath, with DLA Piper, LLP, which will represent 1998 Books Holdings LLC during its appeal of the city’s zoning rules.

The Borders site is “not conducive to be subdivided and is exactly what Michaels needs,” Galbreath said.